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Last month, Stroock’s merger talks with Nixon Peabody fell apart, and since that time, a steady stream of lawyers and legal professionals have headed for the exits. Now, the firm is getting serious about finding a new merger partner, and the first thing that’s got to go is its pension plan.
Back in February, when Stroock was still on the market, the firm acknowledged that its outstanding pension obligations may need to be addressed. At the time, we noted that the firm’s pension plan is tied to its revenue, which at one point was about $40 million annually. These days, the firm’s annual pension liability reportedly sits at about $4 million.
While Stroock was still attempting to combine with Nixon Peabody, the firm contacted its retirees to ask them to consider a reduction in benefits, but now that the firm is desperately seeking another merger partner, it’s taking drastic steps to remove a “major obstacle”: pension buyouts are on the table. The American Lawyer has the details:
While details are still emerging, sources say the firm partnership has now authorized a buyout of the pension fund and has put that decision to a vote with the pensioners, with the deadline for casting the vote on Aug. 8. A firm leader said the authorization was for a complete buyout, which would remove the firm’s pension obligations. …
As for why the law firm didn’t do this before entering any earlier merger talks, [firm co-chair Alan] Klinger said Stroock “looked at several different ways to reduce our pension program before arriving at our current approach.”
Klinger offered the following statement on the firm’s pension problems: “The partnership authorized a buyout of the pension. A vote of the retired partners is in progress. We are optimistic about its success. This will remove a major obstacle to us accomplishing a desired combination. We are grateful to our retiree community, who understands the need and is stepping up to support the firm.”
Best of luck to Stroock as it tries to lighten its liability load to find its perfect merger match.
Stroock Partnership, Seeking to Remove a ‘Major Obstacle’ to Merger, Authorizes Pension Buyout [American Lawyer]
Earlier: Partners, Associates, Staff Flee Biglaw Firm After Merger Efforts Crumble
Biglaw Merger Effort CrumblesThis Biglaw Firm Has The Urge To Merge, But Can’t Find A Willing Partner
Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter and Threads or connect with her on LinkedIn.
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